15 December 2009 Ministerial Correspondence 2009-0345941M4 - HRTC - Eligible Expenditures

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: 1. Whether the cost of nails used to build a deck would qualify for the HRTC
2. Whether the cost of a paint brush would qualify for the HRTC

Position: 1. Yes

2. No.

Reasons: 1 & 2. Generally, the eligible expenditures include expenses for building materials, fixtures, equipment rentals, building plans and permits. However, it will not include an expense incurred to purchase an item that can be used independently of the qualifying renovation.

XXXXXXXXXX

Dear XXXXXXXXXX :

The office of the Right Honourable Stephen Harper, Prime Minister of Canada, forwarded to me a copy of your correspondence, which I received on October 27, 2009, concerning the new home renovation tax credit (HRTC).

You want to know if the cost of nails used to build a deck and that of paint brushes used for painting qualify for the HRTC.

The proposed HRTC will provide individuals with a temporary 15% non-refundable income tax credit on eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009, and before February 1, 2010, for agreements entered into after January 27, 2009. Taxpayers can claim this credit for the 2009 tax year on eligible expenditures exceeding $1,000, but not more than $10,000, which will result in

a non-refundable tax credit of up to $1,350.

The legislation regarding the new HRTC was introduced in the House of Commons on September 30, 2009, by the Honourable James M. Flaherty, Minister of Finance. The proposed legislation states that expenditures will qualify if they are directly attributable to a renovation or an alteration of an eligible dwelling, including land that forms part of the eligible dwelling, and if the renovation or alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures will include the cost of labour and professional services, building materials, fixtures, equipment rentals, and permits.

An eligible dwelling is a housing unit located in Canada that is owned by the individual, at the time of the renovation, and ordinarily inhabited by the individual, his or her current or former spouse or current or former common-law partner, or his or her children at any time after January 27, 2009, and before February 1, 2010. Therefore, any housing unit that an individual owns and uses personally, including a home and a cottage, qualifies for the HRTC.

Generally, eligible expenditures will include costs for building materials, fixtures, equipment rentals, and building plans and permits. However, eligible expenditures will not include an expense incurred to purchase an item that can be used independently of the qualifying renovation, like the cost of tools purchased to perform the home renovation work. Accordingly, the cost of the nails used for building your deck will qualify for the HRTC, but the cost of paint brushes will not qualify for the HRTC as paint brushes can generally be used independently of the qualifying renovation.

The HRTC envelopes are available in most of the retail establishments for home improvement and construction products and services. You can find more information on the HRTC on the Canada Revenue Agency Web site at www.cra.gc.ca/hrtc and in the Government of Canada brochure available at www.actionplan.gc.ca/grfx/docs/ HRTC_eng.pdf.

I trust that the information I have provided is helpful.

						Sincerely,

						Jean-Pierre Blackburn, P.C., M.P.
						Minister of National Revenue

Ananthy Mahendran
(905) 721-5204
2009-034594